Manufacturing recovering, HSBC index indicates

By Crystal Hsu / Staff reporter

Thu, Feb 06, 2014 - Page 13

Taiwan’s manufacturing conditions improved further last month, lifting HSBC Holdings PLC’s purchasing managers’ index (PMI) to a 33-month high as companies at home and abroad rebuilt their inventories on expectations of a sustained recovery, the British banking group said in a report yesterday.

The index read 55.5 last month, the highest level since April 2011 and up slightly from the 55.2 it recorded in December last year, reflecting an overall improvement of operating conditions, the monthly report showed.

“This is a strong start to 2014, with the growth momentum in output and new orders staying at their recent elevated levels,” HSBC Asia economist John Zhu (朱日平) said in the report.

The index aims to gauge the health of the manufacturing sector, with a score above 50 indicating expansion and any value below that threshold suggesting contraction.

Further growth in output and new orders underpinned the pickup in operating conditions, Zhu said, adding that new orders in particular had continued to rise at as sharp pace as they did in December. Stronger client demand at home and abroad boosted new business, while higher demand in turn indicated that companies are building inventory in anticipation of a sustained recovery, the economist said.

Various international institutes expect global GDP to expand at a faster pace this year compared with last year, which would bode well for Taiwan’s export-oriented economy.

As a consequence of this, local manufacturers increased their purchasing activity for the fifth successive month last month, the report said. The rate of growth was steep, even though it has eased slightly from a month earlier, the report said.

Greater demand for inputs led to a further increase in suppliers’ average delivery times, with the rate at which times were lengthened similar to that recorded in December, the report showed.